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CEILING TEST FOR OIL AND GAS PROPERTIES

9 Months Ended

Sep. 30, 2017

Ceiling Test For Oil And Gas Properties

4.	CEILING TEST FOR OIL AND GAS PROPERTIES

The reserves used in the Company’s full cost ceiling test incorporate assumptions regarding pricing and discount rates in the determination of present value. In the calculation of the ceiling test as of September 30, 2017, the Company used a price of $43.89 per barrel for oil and $2.92 per MMbtu for natural gas (as further adjusted for property specific gravity, quality, local markets and distance from markets) to compute the future cash flows of the Company’s producing properties. These prices compare to $42.75 per barrel for oil and $2.48 per MMbtu for natural gas used in the calculation of the Ceiling Test as of December 31, 2016. The Company used a discount factor of 10%.

For the nine months ended September 30, 2017 and 2016, ceiling test impairment charges for the Company’s oil and gas properties amounted to $0 and $9.6 million, respectively.